CFPB Reports on Servicemembers

On March 6^th, the CFPB released its second “snapshot” report of complaints that it has received from military servicemembers, veterans and their families.¹  The report covers more than 14,000 such complaints that the CFPB received from July 21, 2011 through February 1, 2014. During that period, most complaints concerned mortgages, debt collection, credit cards, bank accounts and services, and credit reporting. Fewer complaints concerned other categories of consumer financial products, such as payday loans.

Within each category of complaints, the complaint topics varied. Most mortgage complaints pertained to issues such as loan modifications, collections and foreclosures. Most debt collection complaints pertained to persistent attempts to collect debts not owed and aggressive communication tactics. Credit card complaints pertained to a variety of issues, such as billing problems. Almost half of the bank account and service complaints pertained to problems opening, closing or managing accounts. More than 70 percent of credit reporting complaints pertained to incorrect information appearing on consumers’ credit reports.
The report notes that consumers have received more than $1 million in monetary relief in response to their complaints.

The report expresses concern that some military families are not receiving special consumer protections to which they are entitled under federal laws. Specifically, the report expresses concern about the following four areas:

• Debt collection: Debt collection is the top complaint category for servicemembers. The CFPB is concerned about aggressive and deceptive tactics used by debt collectors against military members.

• Student loans: The Servicemembers Civil Relief Act (SCRA) provides financial protections to servicemembers, but servicemembers have reported problems obtaining correct and consistent information on available SCRA protections for their student loans. They also report that they are repeatedly and incorrectly asked to submit additional, unnecessary documentation.

• Payday loans: The Military Lending Act (MLA) prohibits interest rates above 36% on some types of loans, including certain payday loans, to active-duty military, their spouses and dependents. Although the number of payday loan complaints has been relatively small, the CFPB is still concerned that lenders are structuring their products so that they fall outside of the scope of the MLA.

• Mortgages: Servicemembers have complained that mortgage servicers’ lack knowledge about military-specific programs and that they are unaware of the guidance offered by the CFPB regarding servicemember protections.

CFPB Publishes Source Code for Homeownership Counseling Tool

On March 6^th, the CFPB published open source code that lenders can use to build their own tools to produce lists of local housing counseling agencies for consumers.²   The tool allows users to find the 10 closest HUD-approved housing counselors to a loan applicant’s location and print or save the results. The CFPB’s 2013 final rule on the Home Ownership and Equity Protection Act requires that lenders provide consumers with a list of homeownership counseling organizations in certain circumstances.

CFPB Updates Strategic Plan

Last week, the CFPB issued an updated strategic plan, budget and performance plan.³  The updated plan provides budget projections for fiscal years 2014 and 2015 and addresses the CFPB’s progress towards several strategic goals set forth in its FY 2013-17 strategic plan. The CFPB estimates that its budget will be $569.8 million for FY 2014 and $583.4 million for FY 2015. By way of comparison, the FY 2013 budget was $538.7 million. For FY’s 2014-15, almost half of the total budget will be allocated to the CFPB’s rulemaking, enforcement and supervisory activities. Similarly, approximately half of the growth in staff over the next two fiscal years will support the Supervision, Enforcement and Fair Lending Division. Looking ahead, the CFPB reports in the plan that it intends to release two more large datasets in FY 2014, in addition to the Home Mortgage Disclosure Act (HMDA) data tool it recently released.

CFPB to Conduct Debt Collection Mail Survey

On March 7^th, the CFPB published a notice in the Federal Register proposing a new information collection entitled “Debt Collection Survey from the Consumer Credit Panel.”⁴   The CFPB is seeking approval from the Office of Management and Budget to conduct a mail survey of consumers in order to learn about their experiences interacting with the debt collection industry. The survey will “ask consumers about their experiences with debt collectors, such as whether they have been contacted by debt collectors in the past, whether they recognized the debt that was being collected, and about their interactions with the debt collectors.” The CFBP intends to use the survey results in its debt collection rulemaking.

CFPB Files Amicus Brief in FDCPA Case

On March 5^th, the CFPB and the Federal Trade Commission (FTC) jointly filed an amicus brief inBuchanan v. Northland Group Inc.⁵  The Sixth Circuit case deals with the collection of debt for which the statute of limitations has expired. Specifically, the case addresses the issue of whether, as a matter of law, a collection letter that makes no actual or implicit threat of litigation violates the Fair Debt Collection Practices Act (FDCPA). The FDCPA prohibits the use of false, deceptive, or misleading representations in connection with the collection of a debt. In the brief, the CFPB and FTC urge the court to reverse the district court, which held that a collection letter that makes no actual or implicit threat of litigation does not violate the FDCPA. The CFPB and FTC argue that “a settlement offer can erroneously lead unsophisticated consumers to believe a debt is enforceable in court even if the offer is unaccompanied by any clearly implied threat of litigation.”

 _{1  See the full report here.} 

_{2   See the source code here.} 

_{3  See the updated strategic plan here.} 

_{4  See the notice here.}  

 _{5  See the amicus brief here.}